Herald Sun - Motoring - - CARSGUIDE CONFIDENTIAL - Twit­ter @RTMBlack­burn

IF you buy a $15,000 used car on fi­nance it could end up cost­ing you $50,000 over five years.

That sober­ing news was de­liv­ered this week by the Aus­tralian Se­cu­ri­ties and In­vest­ments Com­mis­sion.

ASIC has launched a new app called MoneyS­martCars de­signed to help peo­ple es­ti­mate the real cost of run­ning a car — and avoid what it claims can be thou­sands of dol­lars in hid­den costs.

The app, which is un­likely to be well re­ceived by car deal­ers, looks at “car in­sur­ance traps” and con­tains warn­ings about ex­tra in­sur­ance and car mod­i­fi­ca­tions you don’t need.

ASIC deputy chair­man Peter Kell says the av­er­age car debt per house­hold is $19,500 and many peo­ple don’t take into ac­count the cost of reg­is­tra­tion, in­sur­ance, ser­vic­ing and run­ning costs when work­ing out whether they can af­ford a new car.

“Many con­sumers fall prey to poor fi­nan­cial de­ci­sions, when in a car yard for ex­am­ple, be­cause they may be solely fo­cused on the car or over­whelmed by in­for­ma­tion over­load,” Kell says.

He high­lights a re­cent ASIC re­port that found con­sumers can pay up to 18 times more for life in­sur­ance pur­chased through a car dealer.

The app has a case study on a buyer called Susie, who re­port­edly bor­rowed $20,000 to buy a car and spent $8000 on ex­tra in­sur­ance prod­ucts. It claims that with in­ter­est, she ended up spend­ing $10,000, half the price of the car.

Con­sumer and credit in­sur­ance and gap in­sur­ance ended up cost­ing her $3000 over the life of the con­tract, while an ex­tended war­ranty cost her $5000.

It also warns against sign­ing up for bal­loon pay­ments and se­cured loans, which are cheaper but al­low the dealer to re­pos­sess the car to pay off a debt.

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